Commercial real estate isn’t a career to be taken lightly. A number of newcomers to commercial real estate investing have successfully learned the ropes and turned a tidy profit. The purpose of this article is to educate you about some of those basics so you too can experience success.
If you’re a buyer or if you’re a seller, it’s important that you negotiate. Ensure that your opinion is known, and wrangle for the best price you can get on the property.
Make sure that you invest some time researching local income levels and other factors, such as unemployment rates or local employers plans for expanding or contracting their businesses before you invest a large amount of funds into real estate. Think about what locations are near where you are thinking of buying. Hot spots are usually around places like hospitals or universities because the surrounding neighborhood is going to be more lively and open with jobs available.
Whether you want to rent or lease, you will have to deal with pest control. If you are renting in an area that is known to have a lot of rodents, pests, or bugs, then ask your agent what the policies on pest control are.
Location is a very important part of commercial real estate. Consider how the neighborhood will affect business. You will also want to calculate growth expectations by comparing similar neighborhoods. Do not buy a property that is located in a neighborhood likely to take a wrong turn in the next five years.
Buying commercial property takes more time, and the process is far more labyrinthine, than buying a house. Know that the duration and intensity is essential to getting a higher return on the investment you made.
Initially, your investment will take up a great deal of your time. First, you will need to search for an opportunity and purchase the property, as well as perform any repairs that are required. Do not let the lengthy nature of the process discourage you. The rewards will show themselves later.
Once you have narrowed your choices down to two major contenders, you should expand your decision to include the big picture. Whether it be a twenty or ten unit apartment complex, you want to get adequate financing to back you up. The concept here is the same as any other situation where you are purchasing multiple things. The more you purchase, the less you will pay for each unit.
Ask any potential broker about what experience they have had with commercial property before choosing someone to represent your interests. Look for brokers who specialize in the type of commercial property that you’re purchasing or selling. You should be sure to enter into an exclusive agreement with that broker.
Occupation is the key when you purchase commercial properties for rent. You are responsible for the expenses associated with keeping your unoccupied spaces updated and maintained. You need to ask yourself why properties are not getting rented and fix any issues you discover.
Make sure you have sufficient utility to access on any commercial piece of real estate. Every business has unique requirements, but for most, electric, water and sewer access will be required.
Before you talk about a lease in commercial real estate, make sure to lower anything that might be thought of as events of default, wherever possible. This lowers the chance that the person renting will fail to uphold their end of the lease. This type of situation is considered very undesirable.
Start drafting letters of intent by focusing on the more central issues. Once you have agreement on those, broaden the negotiations to include any smaller issues that remain. This will help to reduce some of the tension in initial negotiations and will also make gaining agreement on some of the smaller issues much easier.
If you follow the suggestions discussed in this article, you’ll have a solid start toward building your real estate investing plans. If you take the time to really apply the strategies you just read, you too can experience the huge rewards that are possible from investing in non-residential real estate.